Mexican President Claudia Sheinbaum has issued a decree that effectively ended the popular “border-skipping” strategy many U.S. e-commerce sellers used to avoid tariffs on Chinese goods.
This decision, which was announced on Dec. 19 and took effect immediately, primarily targets apparel imports and is set to have far-reaching consequences for the industry.
For years, U.S. companies have been importing goods from China to Mexico, shipping them one order at a time to the U.S., effectively avoiding tariffs under the Section 321 provision. This loophole allowed for duty-free entry of shipments valued at $800 or less, making it an attractive option for e-commerce businesses looking to minimize costs.
The reliance on the “border-skipping” strategy was substantial among U.S. e-commerce companies, with many opting to fulfill orders to U.S. consumers from Mexico. This approach enabled businesses to leverage Mexico’s advantageous cost structures, including lower labor costs and the ability to avoid U.S. tariffs, thereby enhancing profit margins. The strategic location of Mexican warehouses allowed for effective 321 fulfillment, providing seamless delivery experiences to U.S. customers as if the items had been shipped domestically.
Companies capitalized on this by importing Chinese goods into Mexico, which were repackaged and sent across the border to the U.S. through Section 321, thus benefiting from the duty-free threshold. This method offered significant cost savings and operational efficiency, making it particularly popular among some of the largest e-commerce platforms targeting the U.S. market. However, the new decree marks a turning point, compelling these companies to promptly reevaluate their logistics and operational strategies.
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